06 March 2010

What we seem to have experienced over the past few years is a massive smart-arsed-economist Freakonomics-syle “counterintuitive finding”-obsession FAIL.

Yes, free money accruing to governments (resources or aid) probably doesn’t do much for their accountability, but does this governance effect really outweigh the free-money effect? Are the institutional effects of free-money so damaging that free money makes countries poorer? Or are we just trying too hard to be clever and “counterintuitive.”?

(As a final aside – the resource/aid/free-money curse only exist when the money is flowing to the government. Giving oil revenues or aid directly to poor people rather than to their governments is obviously logistically more difficult, but ameliorates this problem entirely).

2 comments:

"but does this governance effect really outweigh the free-money effect?"

Does anyone argue this? The per capita GDP of Equatorial Guinea shot up after they discovered oil.... but 99% of that income is going to the president and his cronies. Not exactly a win in my book.

"Giving oil revenues or aid directly to poor people rather than to their governments is obviously logistically more difficult, but ameliorates this problem entirely)."

Why this makes theoretical sense (and I wish this was on the table more often). Is there actually any evidence of this?

Is the "oil curse" really a bit of cutsey, counter-intuitive economics? I think most people have recognised an oil curse for as long as there has been oil. It's usually less about absolute income though - name all the oil-based economies in the world and tell me the proportion of them you think are reasonably developing.

Subscribe

Subscribe via email

About

"Because the consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else." (Lucas 1988, On the Mechanics of Economic Development)

"The philosophers have hitherto only interpreted the world in various ways; the point however is to change it" (Marx 1888)

Roving Bandit is a reference to Mancur Olson, not because I think I'm some kind of badass.

"represent the material embodiment of market discourses that run through the capillary structures of orgs that conform contemporary neoliberal ed policy" -- Education International